Several currencies have been strong against the dollar over the last couple of days, but as Peter Schiff said in his podcast, the biggest gainer wasn’t a currency at all. It was real money – gold.
Gold hit six-year highs on Monday and set records in a number of currencies. It continued to move upward the rest of the week, pushing above $1,500.
Any talk you hear in the media about the strong dollar simply by measuring it against some currencies... You don’t have a strong dollar when the price of gold is rising the way it is. We have a weak dollar. It’s just that we also have a weak yuan and we have a weak euro and we have a weak yen, because all these currencies are falling against gold.”
Peter noted the all-time record highs for gold in countries like Australia and Canada – countries that mine a lot of gold.
It’s only a question of time now, and I don’t think it’s going to be that much time, before gold starts making an all-time record high in terms of US dollars as well, because we are now in a period of global currency weakness. All currencies are losing value when priced in gold.”
Peter said that currencies sink at different levels and currently the dollar is sinking more slowly than a lot of other currencies.
But it’s about to pick up the pace. The dollar is going to be sinking faster as the economic reality sets in.”
There has been a lot of concern about the drop in the yuan against the dollar. Peter said the real problem isn’t that the Chinese yuan is dropping. The problem is going to come when the Chinese currency begins to rise. And Peter said it’s going to rise a lot.
And he said the recent fall in the yuan wasn’t because the Chinese are manipulating their currency. It fell do to market forces. Most investors believe the trade war is going to hurt the Chinese economy and they are selling off the yuan. Trump is upset that the Chinese government did not intervene — that they actually refrained from manipulating the yuan higher than the market wanted to set it.
Peter said he does think the Chinese have manipulated their currency in the past, but said they aren’t really doing that anymore.
Which means the currency is going to appreciate when market forces start to move it in that direction.”
Peter went on to reiterate that the Fed is going to keep cutting rates, noting that Goldman Sachs has projected 75 basis points in cuts by the end of the year.
They’re looking for 75 basis points. We’re going to get 200 basis points. And the reason it’s 200 is because that’s how many we got. Because once they cut 200, now we’re at zero. And the fact of the matter is 200 basis points is not a lot of cutting when you’ve got a bubble this big, and when you’re going to try to reflate an even bigger bubble, you’re going to have to have a lot more ammunition than that, which is why the Fed is going to be going back to quantitative easing. But even that is not going to be enough because it’s going to produce an overdose.”
Also in this podcast, Peter analyzes the bear market rally in the US stock markets and makes the case that the US economy was stronger before we had a bunch of economic advisors – highlighting some of the absurdity coming from Larry Kudlow.